filling the financing void for the next revolution in...
TRANSCRIPT
1REPOSITRAK.COM
Filling the Financing Void for the Next Revolution in Retail
Sponsored by:
Introductions
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Troy PropesFounder & CEO
Prior to Ralston Creek Capital, Troy built an industry leading home fragrance
manufacturing, distribution, and sales organization that served the world’s
largest retailers.
Scott StoreyPresident
Scott has spent his entire career in the financial services
industry in capital raising, mergers and acquisitions, and
consulting capacities.
Louis BagdonasAnalyst
Louis comes from a background in analytics and informatics
primarily focused in the healthcare industry.
Scan Based Trading – Next Evolution in Retail
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Over time retailers have continued to extend payment terms for their suppliers
30days
120days
90days
60days
Scan Based Trading
Retailers pay once product is scanned and sold
at the register
Scan Based Trading (“SBT”)• Scan Based Trading is the process in which suppliers maintain ownership of inventory within retailers’ stores
until items are scanned at the point of sale
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Supplier
1. Supplier ships product to the store
Retailer
3. Consumer purchases the product from retailer
2. Retailer places the product on the shelf on consignment
4. Retailer pays the supplier once product is scanned and sold
Consumer
Benefits the Retailer and Supplier
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• Achieve preferred status with retailer
• Gain competitive advantage
• Improve in store stock position, service levels, and inventory management
• Increases sales as a result of improved inventory visibility, accurate replenishment, and less out of stocks
• No cash outlay for inventory
• Produce the best sales per square foot
• Adjust to a leaner inventory model
• Aligns retailer and supplier to maximize sales
Retailer Benefits Supplier Benefits
The Growth of SBT
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• There is a resurgence of retailers across North America partnering with suppliers to engage in Scan Based Tradingo Traditionally SBT was utilized for products that were perceived as too difficult to manageo As e-commerce applies increasing pressure to retailers, SBT is expanding to mainstream categories
• Forward thinking suppliers have partnered with retailers to engage in SBT programs
• SBT has expanded into most categories and now typically includes non-DSD and slower turning inventory
Providing Working Capital to Suppliers for SBT
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• Traditional banks do not lend against SBT inventoryo Suppliers don’t have the working capital to meet
SBT terms and grow their business
• Ralston Creek Capital (“RCC”) will provide financing to suppliers to meet the increasing demand for capital in the growing SBT market
• Ralston Creek Capital is a leading lender of capital to suppliers engaged in scan based trading supporting their growth and partnership with top retailers
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RCC Fills the Working Capital Void
Scan Based Trading
Asset Based Loan
Asset: $750,000Finished Goods Inventory
$1,000,000Accounts Receivable
Advance Rate: 65% 85%
Bank Working Capital Line: $487,500 $850,000
Sold to retailer
RCC will lend against the SBT inventory to fill this void
Asset: $750,000Finished Goods Inventory
$1,000,000Inventory on the Shelf
Advance Rate: 65% 0%
Bank Working Capital Line: $487,500 $0
Consignment Agreement
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RCC Loan Process
Supplier ships 1,000,000 units Retailer sells $100,000
*This is for illustrative purposes only. RCC advance rates may vary greatly based on product type, margin, and retailer agreements.
Supplier
1,000,000 units at $1.00
Alerts RCC that inventory has been received
$650,000(65% Advance Rate)
Retailer Retailer
RCC reduces the line, collects appropriate fees, and the supplier
receives the balance
Supplier
Retailer sends $100,000 to a joint bank account
$100,000 sold to consumer
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Recent Case Study – Automotive Aftermarket Products in a Value Chain
• A large value store pushed for an automotive aftermarket company to agree to do Scan Based Trading
• The supplier had to continually turn down the opportunity because it was against their bank’s policies
• The supplier turned to RCC to fund the $5mm programo Sales are expected to double in 2019
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Recent Case Study – Apparel at a Drug Store Chain
• A national drug chain designated its apparel as Scan Based Trading
• Seeing an opportunity to acquire a new significant customer, a supplier proposed selling its product utilizing SBT
• The supplier turned to Ralston Creek Capital to help fund $3mm of inventory in several thousand stores
Ralston Creek Capital Fills the SBT Finance Gap
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SupplierRetailer
Filling the financing void for the next evolution in retail
RCC specializes in SBT financing
Partnership with Park City Group
RCC is the preferred capital provider to the SBT industry
SupplierRetailer
